7 ways to define Business Model Innovation

Business transformation just got easier

In 2020, all competitive companies are in a state of constant business transformation. That’s just a fact : those that do not evolve are made redundant by stronger, more agile competitors. And so, mediocre companies update their products and services. Good companies update their processes, too. Great companies, meanwhile, update their business models.

Click here for more fun graphs

Over the past decade, entrepreneurs and CEOs alike have been told over and over that Business Model Innovation (BMI) is key to their companies’ growth. They tend to nod knowingly, rarely asking themselves what their business model is. They just know they have to change it. This lack of clear definition often leads to the creation of conflicting objectives / actions, as various stakeholders will have different ideas of what the business model of their company is, and what innovation should look like. They mean well, they’re just missing the larger picture.

Below are 7 ways to define a business model. Each definition creates different strategies for innovation, as I shall prove using the supermarket business model as an example. The definitions are lifted both from the fantastic work of Professors Gassmann, Frankenberger and Sauer (Exploring the Field of Business Model Innovation, 2016), and from my own experience as a strategy consultant.

1. Activities definition

“A business model is a set of interdependant activities spanning firm boundaries”

What does that mean?

The company defines itself as a list of actions taken along the value chain, and how those activities are interlinked. This obviously attracts the attention to who perfoms these activities, hence lending a strong HR and governance vibe to an activity-based strategy. This definition also helps differentiate between core activities and annex activities, so that a company can concentrate on the value it adds best (sub-contracting is often used by companies that abide by this philosophy). Activities-based business models are dependent on 4 key concepts, which make each company unique:

• Novelty — Activities leading to innovation…